CBRS: New Spectrum and Flexible Indoor and Outdoor Mobile Solution

CBRS White Paper:

CBRS: New Shared Spectrum Enables Flexible Indoor and

Outdoor Mobile Solutions and New Business Models

March 2017

Kyung Mun

Licensed by CBRS Alliance for public distribution

2017 Mobile Experts LLC. All Rights Reserved.

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 CBRS: New Spectrum and Flexible Indoor and Outdoor Mobile Solution

What is CBRS?

In April 2015, the Federal Communications Commission (FCC) formally established Citizen
Broadband Radio Service (CBRS) for shared commercial use of the 3.5 GHz (3550-3700 MHz) band
with the incumbent military radars and fixed satellite stations.1 For the first time, dynamic
spectrum sharing rules have been defined to make additional spectrum available for flexible
wireless broadband use while ensuring interference protection and uninterrupted use by the
incumbent users. Under the plan, a novel three-tier sharing paradigm coordinates spectrum
access among the incumbent military radars and satellite ground stations and new commercial
users. The three tiers are: Incumbent, Priority Access License (PAL), and General Authorized
Access (GAA) users.

3550 3600 3650 3700

US Military Radars (on-ground, ship-borne) Tier 1 (Incumbents)

Primarily in coastal
areas, some inland
Fixed Satellite Stations Wireless ISPs to
transition to Tier 2/3
Wireless ISPs
Tier 2 (PAL)
Up to seven 10MHz channels
Priority Access License (PAL) 3-year term by census tract
Tier 3 (GAA)
General Authorized Access (GAA) At least 80MHz of
commercial use

Figure 1. CBRS 3-Tier Shared Spectrum Licensing Structure

In the highest tier, Incumbent military radar systems, satellite ground stations, and wireless ISPs
(temporarily) are protected from possible interference from the lower tier PAL and GAA users at
all times.

Tier 2 PAL users have the next highest priority access and are protected from GAA users. PAL
licenses within the 3550-3650 MHz portion of the band are assigned based on spectrum auctions.
Each PAL license covers a 10 MHz channel for a single census tract for a three-year term. For any
given census tract, up to seven total PALs may be assigned. With over 70,000 census tracts in
the U.S., each PAL spectrum license is expected to cost much less and encourage participation
from variety of stakeholders. It should be noted that a PAL frequency range may change over
time, based on incumbent activity.

1
FCC Report and Order and Second Further NPRM formally established CBRS in April 2015.

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 CBRS: New Spectrum and Flexible Indoor and Outdoor Mobile Solution

Finally, the lowest tier GAA users are permitted to use any portion of the 3.5 GHz band not
assigned to higher tier users. With an open access rule, GAA provides free access to the
spectrum, similar to unlicensed spectrum. Since PAL licenses are limited to a maximum of 70
MHz in any given census tract; at a minimum, 80 MHz are available for GAA use when not in use
by Tier 1 incumbents. While GAA operation does not require a costly license, GAA operators must
coordinate their use of the spectrum through the dynamic spectrum sharing system.

CBRS Technology Overview (How does it work?)

A key element of the CBRS spectrum sharing architecture is the Spectrum Access System (SAS).
A SAS maintains a database of all CBRS base stations, formally referred to as Citizens Broadband
Radio Service Devices (CBSDs), including their tier status, geographical location, and other
pertinent information to coordinate
channel assignments and manage
potential interferences. To mitigate ESC SAS
possible interference to tier 1 military
radar systems, environmental sensors
known as the Environmental Sensing
Capability (ESC) will be deployed in
strategic locations near naval stations,
mostly along coastal regions, to
detect incumbent activities. When
incumbent use is detected, the ESC
alerts the SAS, which then directs GAA PAL
CBSD class A CBSD class B
CBSDs utilizing impacted CBRS (indoor small cell) (outdoor base station)
channels in that area to move over
Figure 2. CBRS Functional Overview
to other channels. The cloud-based
SAS enforces the three-tier
spectrum sharing mechanism based on FCC rules via centralized, dynamic coordination of
spectrum channel assignments across all CBRS base stations in a region.

The CBRS rulemaking defines two classes of base stations: class A and class B. A class A base
station can be thought of as indoor or low power outdoor small cells with a maximum conducted
power of 24 dBm (per 10 MHz) and maximum EIRP of 30 dBm (1 watt). This type of small cell is
similar to enterprise-class small cells in the marketplace with 250mW transmit power with a
typical 2 dBi omni antenna or up to 6 dBi directional antenna. Meanwhile, a class B base station is
meant for outdoor use with a maximum EIRP of 47 dBm (50 watts). With a very high-gain
antenna, outdoor CBRS base station can potentially be used for fixed wireless purposes. While
indoor and outdoor base stations can be assigned to either GAA or PAL, we expect to see more
indoor GAA deployments until ESC certification and PAL auctions get finalized.

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 CBRS: New Spectrum and Flexible Indoor and Outdoor Mobile Solution

Use Cases and Business Models

Considering that a tier 1 US mobile operator holds, on average, about 130 MHz of licensed
spectrum, 150 MHz of favorable mid-band spectrum in the CBRS band is a significant resource for
further mobile capacity expansion. In addition, the flexible three-tier licensing framework lowers
the barrier to spectrum and promotes success-based investment for new entrants. CBRS offers
cost-effective LTE solutions for both indoor and outdoor applications; opens up new use cases;
and, encourages business innovations from old and new players alike.

Model #1: Mobile Operator Capacity Augmentation

Competing on unlimited service plans, mobile operators are desperately seeking cost-effective
capacity expansion solutions. Despite their efforts to quickly refarm and deploy new licensed
spectrum, it seems the demand is quickly taking up any slack in network capacity. Meanwhile,
the capacity expansion plans through small cell densification have been slow to scale as projects
have been mired in municipal approval processes. Moreover, commercial LTE-U/LAA launch to
opportunistically harness the unlicensed 5 GHz spectrum has also been slow to ramp with market
pushback from Wi-Fi constituents. In the midst of these challenges, CBRS offers 150 MHz of
sparsely used spectrum for LTE capacity expansion -- without the complexity of sharing the band
with Wi-Fi. Furthermore, higher regulatory power limits and better RF propagation characteristic
of the lower 3.5 GHz band yields a longer range than the 5 GHz band. For outdoor deployments,
the maximum power limit of up to 47dBm EIRP for outdoor CBRS base stations provides a
significant boost for outdoor scenarios. Simply put, CBRS offers more flexible approaches to
indoor and outdoor mobile solution than other unlicensed spectrum choices like LTE-U/LAA.

Mobile operators can augment capacity in two ways with CBRS. First, the 3.5 GHz GAA spectrum
bands can be used as supplemental data links as defined in the LTE-U/LAA/eLAA construct while a
licensed band is used as an
Anchor on
anchor carrier for control Licensed spectrum
Carrier
signaling and a primary data path. LTE-U/LAA/eLAA
Supplemental data over Aggregation
Second, TD-LTE on the CBRS bands 3.5GHz shared spectrum

can transport both control

signaling and data traffic over the
3.5 GHz shared spectrum. In both
cases, CBRS offers a higher level of Control & Data over
LTE-TDD
network quality control afforded 3.5GHz shared spectrum

with LTE-based solutions as

compared to Wi-Fi offload.
Figure 3. Mobile Operator Capacity Expansion using CBRS
10-MHz channels allow mobile
operators to apply carrier aggregation to boost peak speeds, in addition to boosting capacity.

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 CBRS: New Spectrum and Flexible Indoor and Outdoor Mobile Solution

While securing PAL licenses for indoor deployments may not yield much benefit, PAL licenses for
outdoor deployments can be useful in guaranteeing a certain amount of spectrum in traffic
hotspots. With PAL licensing, an operator can effectively secure up to 40 MHz of CBRS bands in
strategic geographical locations. Dependent upon how much CBRS networks are built out and
levels of incumbent activities in a given area, the operator can utilize additional CBRS bands on
GAA basis and opportunistically take advantage of extra spectrum resources.

Model #2: New Entrant/Cable Operator MVNO

CBRS is a great option for new entrants like cable operators to build out an LTE network, and is a
compelling traffic offload option for the cable operators looking to enter the mobile wireless
industry with a Mobile Virtual Network Operator (MVNO) strategy. LTE service across both host
macro network and owned CBRS small cell network may simplify network integration efforts and
will likely result in more predictable user experience than offloading to Wi-Fi. Since cable
operators do not yet own much licensed spectrum, this is a big upgrade from Wi-Fi. The cable
operators can capture additional subscriber mobile traffic on the 3.5 GHz band with LTE and 2.4/5
GHz bands with Wi-Fi to reduce the amount of charged traffic going over to the host mobile
operator network.

The profitability of a MVNO business case is heavily dependent on lowering the amount of traffic
going over to the host mobile operator network. Since an MVNO pays a mobile operator for
traffic going over the host operators network, higher subscriber usage directly translates to
higher network cost. Hence, for the cable operators, this means offloading subscriber traffic
over to owned networks as much as possible.

MSO subscriber traffic on host MNO network charged at MVNO rate ($)

CBRS roaming fee $ No external cost MSO

Subscriber
MNO MVNO rent $ MSO
Host Network MNO subscriber roaming traffic ($)
CBRS Network

No external cost for traffic captured on owned network MNO

Subscriber

Money flow Mobile operator (MNO) entities in Blue

Data traffic flow Cable operator (MSO) entities in Red

Figure 4. New Entrant MVNO Capacity Improvement Business Model

One possible new business model involves a swap arrangement with the host mobile operator
to allow MNO subscribers to roam onto the CBRS network in exchange for a lower MVNO terms.

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 CBRS: New Spectrum and Flexible Indoor and Outdoor Mobile Solution

Having owned LTE-based network in strategic places where most of subscriber traffic is
generated or consumed, affords additional optionality for the cable operators. Besides reducing
MVNO expenses through traffic offloading, the cable operators can negotiate for better MVNO
terms involving a potential swap deal.

Model #3: Neutral Host RAN

There is a growing need for neutral host providers to bridge the gap between very large projects
with direct mobile operator involvements and large numbers of smaller projects that are too
small for mobile operators to
consider, but too complex for
enterprises to handle on their
own. There is an opportunity for
new entrants with CBRS
deployments that involve SAS
SAS Neutral Host
Network coordination and managing core
(Service Provider)
network integration with mobile
operators. Beyond the obvious
MNO 1 large public venues such as
MNO 3
stadiums and airports, hi-rise
MNO 2 buildings, large hospitals, and
university campuses are well
Figure 5. Neutral Host Network Provider using CBRS
suited for neutral host providers
to address a growing, pent-up demand for in-building wireless coverage and capacity expansion.
For enterprises with limited IT/telecom resources, a neutral host provider can take over the
technical work and coordination with the operators. About 30 billion square feet of US
commercial floor space has poor mobile coverage.2 With broad support from all four major
operators and leading device platform vendors, neutral host providers can create a major new
category of mobile coverage, funded by the enterprise or property owner.

Model #4: Enterprise Private LTE

Large enterprises have traditionally deployed Wi-Fi networks to satisfy the growing wireless data
demand. However, it has been a poor substitute for seamless mobile voice services indoors.
While Distributed Antenna Systems (DAS) provide the multi-operator support, they are
considered too expensive for many enterprises, and too complicated in dealing with mobile
operators to secure signal sources. CBRS radios, like Wi-Fi access points, that support a multi-
operator capability and run seamless LTE services are a powerful improvement.

2
Mobile Experts, Unlicensed Business Models, Players, and Opportunities, Dec. 2016.

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 CBRS: New Spectrum and Flexible Indoor and Outdoor Mobile Solution

An opportunity to create a private LTE network, in similar manner as Wi-Fi, to run enterprise- or
venue-specific applications on mobile devices of consumers or workers enables tremendous
flexibility -- and allows enterprises to
tap into broader device and app
store ecosystems that already exist.
For instance, a large corporation can
Transportation Venue
run secure enterprise CRM and
communication tools on workers
mobile devices through a private Entertainment Venue
Enterprise In-Building
LTE network at enterprise Wireless

campuses. In another example, a

heavy industry company can set up a
Heavy Industry / IoT
private LTE network at a remote
mining site and run industrial IoT Figure 6. Enterprise Private LTE Networks
applications on LTE devices. A recent
demo from Nokia, Qualcomm and Alphabet showcasing a live 360-degree VR streaming from a
race car is yet another example of new user experiences that can be enabled on high-capacity
private LTE networks leveraging the CBRS bands.

Comparative Economics of CBRS

CBRS offers attractive unit economics for mobile coverage and capacity. Up to 150 MHz of
favorable mid-band spectrum at expected low spectrum acquisition cost opens new business
opportunities that have been prohibitive in the past. With the support of all four major mobile
operators in the U.S., and the existing use of 3.5 GHz as an LTE band in other parts of the world,
the device ecosystem support for the 3.5 GHz CBRS band/technology is more likely than ever,
and the broadening ecosystem is likely to bring scale advantages and consequently low-cost
solutions. Comparative unit economics in terms of monthly cost to deliver a gigabyte of data
shows that a CBRS base station can potentially deliver a 40% reduction relative to a traditional
LTE small cell leveraging licensed spectrum.3 The primary advantage of CBRS comes from the
capability to aggregate up to 40 MHz of cheap spectrum even though extra costs for SAS and
mobile operator gateway handling are incurred for CBRS.

3
Our cost model includes major CAPEX and OPEX elements including radio equipment, spectrum, hosted core, site
lease, backhaul and power. We estimate monthly costs for the radio and spectrum costs using a straight-line
depreciation of 8 years for macro, 4 years for small cells, and 20 years for licensed spectrum.

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 CBRS: New Spectrum and Flexible Indoor and Outdoor Mobile Solution

Outdoor Economics Indoor Economics

Cost per GB Cost per Square Foot
(200K sq.ft. building, 4 MNO support, 5-Year TCO)

Lower cost with small

cell as signal source
Monthly $

-40% -68%

$/sq.ft.
Macro Cell Traditional Small Cell CBRS Outdoor
(FDD, 10x10) (FDD, 10x10) (TD-LTE, 40MHz) Wi-Fi DAS MNO Small Cells CBRS Small Cells

Figure 7. Comparative Unit Economics of Outdoor and Indoor Deployments4

For indoor coverage, our study shows a much lower cost per square foot in terms of unit
economics for CBRS relative to DAS and traditional small cell deployments. A key factor: a single
CBRS radio can support all four major operators in the 3.5 GHz band by default. In comparison,
multiple, parallel operator-specific small cells are required in a traditional licensed small cell
deployment case. Although DAS cost can be brought down with less expensive small cell as a
signal source for smaller venues, CBRS still offers a much lower-cost alternative for mobile LTE
coverage. (While Wi-Fi offers a lower cost solution for in-building wireless coverage, seamless
mobile voice service is not possible with Wi-Fi.) Additionally, CBRS can be used to provide a
quality LTE layer for wireless data services in enterprise venues where the 2.4 GHz and 5
spectrum bands are heavily utilized by Wi-Fi.

Concluding Remarks

CBRS is blazing a new trail in spectrum policy and is opening new opportunities along the way.
The novel approach to spectrum sharing is opening up 150 MHz of favorable 3.5 GHz band whose
ecosystem already has traction worldwide. Chipset and equipment ecosystem for the 3.5 GHz
band has been gathering momentum through global TD-LTE developments around 3GPP band 42
(3400-3600 MHz) and band 43 (3600-3800 MHz). The FCC petition to update the rules for the
3.7-4.2 GHz band could potentially open additional shared spectrum for a total of 650 MHz, which
would be more than the combined total licensed spectrum holdings of all four major operators!5
CBRS offers tremendous opportunities for traditional operators and new entrants alike to enable
both in-building wireless and outdoor mobile coverage and capacity expansion at lower cost.

4
Based on Mobile Experts research on Small Cells, DAS, and Carrier Wi-Fi/LTE-U
5
Fixed Wireless Communications Coalition (FWCC) filed a petition to update the rules for the 3.7-4.2 GHz band
allocated for the satellite industry.

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 CBRS: New Spectrum and Flexible Indoor and Outdoor Mobile Solution

A large swath of spectrum, a flexible spectrum licensing regime, and a growing CBRS ecosystem
supported by all major operators bodes well for technology and business innovations in the CBRS
band. There is a growing optimism around new business opportunities that can be enabled by
LTE-based solutions in the CBRS band. With 3GPP band 48 (3550-3700 MHz) designation, the 3.5
GHz CBRS ecosystem is gaining global scale beyond the U.S. This optimism will ignite the
virtuous cycle of expanding market opportunities for CBRS and all its ecosystem partners.

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